When to use your credit card over your debit card

When did you last reach for cash to pay for a purchase at a store? It's probably been quite some time if you're like most people. According to the Federal Reserve Bank of San Francisco, cash made up just 18% of payments made in 2022, while credit cards were by far the most popular payment method.

If you use something other than credit cards as your primary payment method, you could be putting yourself at risk. Using cash or debit could cause you to miss out on critical purchase protections.

When to use a credit card: 5 occasions when credit is a necessity

Credit cards can be useful; you can pay for items and services without the hassle of stopping at an ATM or carrying wads of cash. You can even connect your credit cards to your phone to use mobile or contactless payments. Plus, credit cards allow you to earn valuable rewards and take advantage of multiple financial protections.

If you aren't in the habit of using credit for most purchases, there are certain transactions where credit cards are a better payment method than debit or cash.

Purchasing electronics or appliances

When it comes to electronics and appliances, they can be a major investment. With such a substantial expense, you'll want to protect your purchase. Using a credit card to cover the cost could give you the following benefits (and peace of mind):

• Price protection: If your card offers price protection and you buy an item and see its price drop within a certain period — such as within 30 days of your purchase date — this benefit may refund the difference in cost. For example, if you buy a refrigerator for $1,200 and it goes on sale two weeks later for $900, your credit card issuer would refund you the $300 difference.

• Purchase protection: When you spend a large amount of money, you want to know that the item will work. If you use a credit card with purchase protection benefits and the item breaks or is stolen within a certain timeframe — such as 90 days from the purchase date — your card will reimburse you for the purchase amount (some issuers have caps on how much you can be reimbursed annually).

• Extended warranty coverage: Extended warranty credit card benefits increase the warranty on eligible purchases — often by one to two years. By using a credit card, you can protect your item even after the manufacturer's warranty expires.

Cell phone bills

Some rewards credit cards offer a higher rewards rate on cell phone bills, so you may be able to earn additional cash back, airline miles or points. Plus, paying your bill with a credit card may entitle you to cell phone protection — a useful benefit when cell phones cost anywhere from $400 to $1,000 or more. Some cards even provide cell phone insurance that protects you against theft or damage.

Airfare, cruise fares, and other travel

If you plan on traveling, use a credit card to book your airfare, cruise fares and other travel arrangements. Many credit cards provide free travel insurance benefits that can be incredibly useful if you experience any issues during your trip. Common credit card travel benefits include:

• Travel cancellation or interruption insurance: If your trip is cut short or canceled due to severe weather, illness, or another covered reason, your credit card will cover you up to a certain amount for your non-refundable bookings.

• Lost luggage reimbursement: If you're traveling and the airline loses your luggage, your card may reimburse you up to a set maximum to replace the luggage and its contents.

• Trip delay reimbursement: If your flight is delayed, trip delay reimbursement can help cover the unexpected cost of a hotel stay or meals.

Car rentals

If you need to rent a car, check to see if your credit card offers auto rental collision damage waiver protection. This benefit applies if you pay for the rental with your card and decline the rental company's collision insurance. It provides you with free coverage against theft or collision damages that occur during the rental period.

Online purchases

Online shopping is convenient, but it can also be risky. Hackers can steal your payment information and make unauthorized purchases in your name.

If you use a debit card, you could be liable for those unauthorized charges. Depending on how quickly you report the charges, your liability could range from $50 to the total cost of the fraudulent charges.

However, if you use a credit card, you have more protection. As long as you report the transactions to your credit card issuer, the maximum you could be held responsible for is $50; the issuer will waive the remaining unauthorized charges.

Managing your credit card

Using credit can be a good way to earn rewards and give yourself an extra layer of protection. If you're worried about using your credit card too often and racking up debt, follow these tips:

Establish waiting periods for yourself

If you want to make a purchase, impose a waiting period on yourself, such as 48 to 72 hours. You may find that making yourself wait makes you think twice about the transaction, and it eliminates impulse purchases.

Clear your payment information

Online retailers are often eager to save your payment information since it allows you to check out faster (and before you can reconsider whether it's a good idea). Delete any saved payment information from retailers so you have to manually type it in every time; the extra time it takes could be enough to change your mind and curb your spending.

Stick to a budget

Credit cards are easy to overuse, so tracking your spending and sticking to a budget can help you avoid unnecessary transactions. You can create your own spreadsheet or use a budgeting app to handle it for you, but whichever method you choose, check in frequently to keep your finances in good condition.

Editorial Disclosure: The information in this article has not been reviewed or approved by any advertiser. The details on financial products, including card rates and fees, are accurate as of the publish date. All products or services are presented without warranty. Check the bank’s website for the most current information. This site doesn't include all currently available offers.